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Council cash cows

Cost overruns, delays and court battles on high profile projects have raised eyebrows across the profession. Bernadette Redfern asks what is going wrong with local government procurement?

The cost overrun at Bath Spa stands near £28M. The Clissold Leisure Centre in Hackney, London will be £26M over budget when it finally re-opens next year.

The Scarborough coastal defence project overspend is estimated to be £14M and Portsmouth's Spinnaker Tower could be as much as £10M over budget when it is completed in May.

So why, when it comes to major projects, are some local authorities losing the plot?

According to senior industry figures, there are several reasons. Political pressures, a lack of relevant skills, poor understanding of risk management, tendering too early, changing designs and process driven contractors all have a hand in it.

'There is a whole cocktail of issues to consider, starting with an undue optimism among some authorities over what can be achieved for a certain amount of investment, ' says independent consultant and former Hampshire county surveyor, John Ekins.

'They face political pressure to delude themselves that a project can be done for less.' Another senior engineer, whose involvement in a recent high profile project means he must remain anonymous, agrees that politics is key to failing procurement.

'Politics is the number one problem with local government procurement. Dates are set in the council agenda, money gets allocated and has to be spent or central government will take it back, ' he explains.

'The cash goes into the budget, programmes are written but the council still doesn't know exactly what it wants, ' he adds. 'But the date has already been set for tendering, so it gets tendered before the design is complete and changes are made to the design later, which is a licence to print money to a contractor.' And of course once a project runs into trouble there is also pressure on the council not to admit any liability - wasting taxpayers money can become an election issue, so battles ensue.

'Councils spend more money going to court to try to save face and the costs of this can be far in excess of any reward or compensation paid out, ' says the engineer. 'But there is so much public scrutiny that they can't do a deal.' But it's not all bad news as the private finance initiative (PFI) is becoming more and more popular with local authorities. And these are the least risky form of contract for a local authority, says the chief executive of one well known consultancy, 'With PFI design . becomes very competitive and the contractors become the clients and carry the risk, ' he says.

However, he points out that councils must have the commercial nous to change longtime habits and a dynamic staff to embrace new procurement methods. And unfortunately not enough highflying engineers opt to work for local authorities.

'Local authorities face a lot of competition when it comes to attracting staff, ' says a senior London-based engineer who has worked in local government for most of his career.

'People think they are making the choice between humdrum projects in a local authority or travelling around the world on major projects with a consultant, ' he says. 'Plus the councils don't pay as much, ' he adds.

His advice is that local authorities need to market the good things that they have to offer. 'They give a fabulous grounding in multi-skilling and life-cycle engineering, ' he says.

Several government initiatives have been set up to advise and guide councils through the procurement of major projects.

The 4Ps - the public private partnerships programme - was launched in 1996 as 'the local government procurement expert'. And in 2003 the Office of the Deputy Prime Minister (ODPM) and Local Government Association launched a National Procurement Strategy which 'sets out how councils can improve the delivery and cost effectiveness of high quality services through more effective, prudent and innovative procurement practices'.

Details of both of these initiatives are available online - and there is much to read (see Infoplus). Much has been said on the topic of better local authority procurement over the years by a succession of government ministers.

But the high profile examples highlighted here show that the well meaning efforts of these organisations have still to get through to the procurement officials at the coal face.

This is perhaps why the government has moved on to the offensive, asking Highways Agency officials to help government improve procurement of transport and other projects. Let's hope the effect is positive.

INFOPLUS . 4P's website - www.4P. co. uk has procurement packs for housing and transport projects . A direct link to the government's national procurement strategy for local government can be found at www. nceplus. co. uk

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